A small group of computer nerds drop out of school, set up a tiny business in a garage and conquer the tech world. This is the American Dream, Silicon Valley style. Unicorns (billion dollar and private companies) that turn an idea into a multi-billion dollar business are vanishingly rare. Since a lot of the aspiring unicorns have no viable business model (or none at all) that can justify their valuations, they usually rely on matrices like “eyeballs” or “engagement.” These can be appealingly convincing in frothy times but they are far less exciting in down cycles, which happen on average every five to seven years (and the 2008-9 crisis was how many years ago?).

In contrast, innovation-based tech companies that spend resources on development and the creation of intellectual property (IP) value remain relatively stable in terms of valuation in both good and bad years. Their multi-tiered exit market is less cyclical than the consumer-based companies.

Tech companies also offer investors greater stability. Cambridge Associates has calculated the dollar-weighted internal rate of return (IRR) of VC investments (by investment year) and found that Internet e-commerce companies that won investment money in 2001 and 2008 (when the market was down) returned -21.72 percent and -3.1 percent respectively. Media and communication VC investments returned -5.27 percent and -3.86 percent in those same years.